Czech annual inflation eases to 1.4% in July, below forecast.

By bne IntelliNews August 9, 2013

Czech annual inflation eased to 1.4% in July 2013 from 1.6% the month before as food and housing prices grew at a slower pace and telecommunication prices continue to decline, data from the statistics office showed. The reading was below the forecast made by analysts polled by CTK news agency, who forecast inflation to speed up to 1.7% in July.

In monthly terms, consumer prices in the country fell 0.2% in July following a 0.4% hike in June. The monthly drop was mainly due to a 13.8% fall in vegetable prices with potatoes sliding by 29%.

Food and non-alcoholic beverage prices dropped 2.2% on the month in July reducing the annual growth to 5.7%. Housing and utility prices edged down by 0.3% m/m in July also bringing down the annual growth to 1.2%. Post and telecommunication charges continued to decline falling by 11.9% y/y in July.

The July annual inflation was below the central bank’s forecast of 1.7% and remained below its annual target of 2%. The central bank cut its main two-week repo rate to 0.05% in November and said it will keep the rate at the current record low level until inflation pressures increase significantly.

In its latest inflation report, published today (August 9), the central bank said annual headline inflation will stay slightly below its 2% target by the end of 2013 before falling more markedly below the target at the start of 2014 when the first-round effects of changes to indirect taxes will drop out.

The reading bolsters arguments of the central bank for koruna sales to further relax the monetary conditions to support the economy that has been in recession since mid-2011. With rates now close to zero the central bank has repeatedly reiterated plans to weaken the koruna but rate setters are divided on the timing of such sales that will be the first in more than a decade.

  July 2013 y/y change June 2013 y/y change July 2013 m/m change
Total 1.4 1.6 -0.2
Food and non-alcoholic beverages 5.7 6.3 -2.2
Alcoholic beverages, tobacco 3.2 3.3 0.4
Clothing and footwear 0.0 -1.4 -2.3
Housing, water, energy, fuel 1.2 1.6 -0.3
Furnishings, households equipment and maintenance -0.6 -0.6 -0.3
Health 2.1 3.3 -0.1
Transport 0.6 -0.4 0.5
Post and telecommunication -11.9 -12.0 -0.1
Recreation and culture 0.2 0.0 2.5
Education 1.4 1.4 0.0
Restaurants and hotels 2.1 1.8 0.2
Miscellaneous goods and services 1.7 2.2 -0.5
Source: Stats office      

Related Articles

Poland’s PKN Orlen launches offer to delist Czechia’s Unipetrol

Poland’s state-controlled oil and gas company PKN Orlen has launched an offer to take over Czech refiner Unipetrol, the Polish company said on December 13. PKN Orlen said it will go through with ... more

Petr Kellner agrees to buy Skoda Transportation for reported €400mn

Petr Kellner, Central Europe’s richest man, has agreed to buy Skoda Transportation, the Czech manufacturer of electric trains, trams and ... more

CEFC and Penta reported to be bidding together for CME

CEFC, the acquisitive Chinese energy group, and Penta Investments, the closely-held Slovak financial group, are bidding together for Time Warner’s stake in Central European Media Enterprises (CME), ... more

Dismiss